Some people will tell you that a contract is the lifeblood of a business, while others will tell you it is your first and only line of protection against the misconduct and failings of others. Regardless of how you view contracts, there’s little question that they are crucial to your continued business success and growth.
There are numerous kinds of contracts that businesses may require in different industries or when using certain business models. However, there are typically at least four kinds of contracts that most businesses need to create.
Employment offer letters and contracts
The language in the letter when you extend an offer of employment to an employee is crucial. Statements made in that letter could influence your long-term obligations to that employee.
Therefore, it is crucial that businesses carefully draft not just their employment contracts but also the letters that they sent out to extend an offer of employment to a new worker.
Invention assignment agreements
If you intend to hire workers, whether you hire someone to handle your marketing or bring in engineers to develop better products, you need a contract in place to ensure that what they produce belongs to the business should they ever leave their employment with your company.
Confidentiality agreements and restrictive covenants are also often an important part of employment contracts to ensure workers don’t share their company secrets with others.
Service contracts or payment arrangements
If your company provides services rather than goods, you need to have a signed contract with clients before you start doing work, or else you run the risk of them not paying you or complaining about your company failing to meet unreasonable expectations.
If you do provide goods and accept any form of payment other than payment in full from the other party, you may need a specialized contract discussing how they will make payments and what happens if they fall into arrears.
Maybe you will need to hire an outside company to provide security services or management support to your business to keep your internal operations as streamlined as possible. Perhaps you will rely on vendors for products or materials that are crucial to your company’s operations.
You will need to draft business-to-business contracts that solidify your arrangements with other companies and potentially even impose penalties if they fail to deliver the promised goods or services. There are many other contracts that you may need to draft to do business safely, and the contracts you have may eventually require adjustments so that they remain legally valid and enforceable.
Creating unique contracts will be an important step for protecting your company’s future.